In a decision decided last month, the California Court of Appeals for the First District, in Palagin v. Paniagua Construction, Inc., Case No. A137754 (December 16, 2013), reversed a trial court which had permitted a contractor to appeal an adverse Labor Commissioner decision without first posting an appeal bond. Tsk, tsk.

Background

The case began when welder Igor Palagin filed a wage claim with the California Labor Commissioner alleging that he was an employee of Paniagua Construction, Inc. (“Paniagua Construction”) and Alfred Martinez and that they had failed to pay him. On June 20, 2012, the Labor Commissioner issued a decision in favor of Palagin and against Paniagua Construction and Martinez and awarded him $34,259.32.

Thereafter, on July 6, 2012, Paniagua Construction and Martinez filed a notice of appeal with the San Francisco County Superior Court. However, they failed to post an appeal bond within 10 days of the Labor Commissioner’s decision as provided under California Labor Code section 98.2.

Palagin in turn filed a motion to dismiss the appeal.

On August 7, 2012, 49 days after the Labor Commissioner had issued its award, the trial court granted Palagin’s motion but extended the 10-day deadline under Section 98.2 for Paniagua Construction and Martinez to post an appeal bond through September 6, 2012.

Paniagua Construction and Martinez ultimately posted an appeal bond, and on re-trial the Superior Court reversed the Labor Commissioner finding that Palagin was not an employee of either Paniagua Construction or Martinez and was instead “a subcontractor.”

Palagin appealed.

The 10-Day Deadline to Post an Appeal Bond is “Jurisdictional” not “Directory”

On appeal, the First District Court of Appeal framed the issue as whether the 10-day deadline under Section 98.2 is jurisdictional or directory. If jurisdictional (read: mandatory), Paniagua and Martinez were required to post an appeal bond within 10 days of the Labor Commissioner’s decision, and their failure to do so, barred their appeal. If merely directory (read: strongly suggested but not necessarily mandatory), the trial court could (as it did) extend the deadline for Paniagua and Martinez to post an appeal bond beyond the 10-day deadline.

The Court, looking at the language of Section 98.2, the legislative history of the section, and considering the public policy behind the section, found that the 10-day deadline to post an appeal bond under Section 98.2 was jurisdictional not directory.

Looking first at the language of Section 98.2, which provides that “[a]s a condition to filing an appeal pursuant to this section, an employer shall first post an undertaking with the reviewing court in the amount of the order, decision, or award,” the Court held that it was clear that “[an] employer must post the undertaking before it files its notice of appeal[ ] and no later than 10 days after service of the Commissioner’s order” (emphasis added).

Moreover, held the Court, when section 98.2 was last amended, it was amended in response to an earlier court decision in Progressive Concrete, Inc. v. Parker, 136 Cal.App.4th 540 (2006) which had found that the former section’s deadline was directional rather than jurisdictional.

And, finally, held the Court, one of the public policies behind Section 98.2 is to require the posting of an appeal bond to “discourage[] employers from filing frivolous appeals for purposes of delay (at least without an undertaking) and minimizes the time in which an employer might hide assets.”

Conclusion

The moral of the story here is: Make sure you follow every statutory requirement. Every section, every sentence, every word. Because while one court might give you a break, another (higher court) may well not.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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